When Is the Best Time of Year to Retire?

Choosing the best time of year to retire is largely subjective, impacting your taxes, healthcare costs, retirement account withdrawals and Social Security benefits. Retiring early in the year may allow you to benefit from lower tax rates, while retiring later could maximize your Social Security payments. Aligning your retirement date with the end of a fiscal year could also maximize employer benefits, such as bonuses or retirement plan contributions. Knowing the best time of year to retire can benefit your financial future, but it’s important to first assess these key considerations.

If you need help figuring out when is the best time to retire for you, a financial advisor can walk you through specific options.

Timing Your Retirement for Taxes

If you retire and file for Social Security at the earliest eligible age of 62, your benefits could be permanently reduced by as much as 30%. Waiting until your full retirement age, which is typically 66 or 67, allows you to receive full benefits. However, delaying retirement until age 70 can increase your monthly benefits by up to 8% per year.

Timing your retirement carefully can help you maximize your Social Security income, but there are also tax implications that affect the best time of year to retire.

Year-End Retirement

Retiring at the end of the year allows you to maximize your income.

This can boost your final year’s earnings but also push you into a higher tax bracket, especially if you’re already taking Social Security benefits or withdrawing from retirement accounts. For some retirees, it also means locking in another full year of employer contributions, bonuses or payouts for paid time off.

However, higher total income may raise your Medicare premiums or affect the taxation of your Social Security benefits. Therefore, careful timing of withdrawals is key.

Mid-Year Retirement

If you plan to start withdrawing from retirement accounts or receiving Social Security benefits, retiring in the middle of the year can provide a strategic tax advantage.

This reduces your taxable income, which may help you remain in a lower tax bracket. You can also spread your tax liabilities over two tax years, potentially reducing the overall tax burden.

Mid-year retirement can also make the transition smoother if you want a few months of income to ease into retirement. It will give you time to adjust your budget while you coordinate the start of pension or annuity payments.

Early-Year Retirement

This option is often the best time of year to retire for many pension holders, because it can add a cost-of-living increase to your benefits after January 1.

If your company does quarterly bonuses, it can make retiring after the first quarter a viable option. Retiring early in the year may also simplify tax planning, as it limits your wages for that year. You have greater flexibility to time withdrawals, conversions or required minimum distributions (RMDs) later.

For those transitioning to Medicare or private coverage, it also provides more time to manage healthcare enrollment and expenses for the year ahead.

Health Insurance and Medicare Considerations

If your best age to retire is before you turn 65, you must consider insurance costs and coverage options until Medicare kicks in. This could involve staying on your employer’s health plan through COBRA, purchasing a private plan or relying on a spouse’s insurance. However, this may depend on enrollment dates that are already on the calendar and conflict with your strategy.

For those retiring at or after age 65, the initial enrollment period (IEP) for Medicare begins three months before your 65th birthday and ends three months after it. Retiring during this window ensures that you have timely coverage without incurring late enrollment penalties.

Maximizing Retirement Savings Withdrawals

A couple researching retirement withdrawal strategies.

The timing of your retirement can also affect how you manage withdrawals from your retirement accounts. This includes your 401(k)s, IRAs and Roth IRAs.

Required Minimum Distributions (RMDs)

Once you turn 73 (75 if you were born in 1960 or later), you are required to take minimum distributions from your traditional retirement accounts.

To calculate your RMDs, you divide your account balance as of Dec. 31 of the previous year by an IRS life expectancy factor that corresponds with your age.

For example, say you turned 73 in 2025 and your IRA balance on Dec. 31, 2024, was $250,000. Your life expectancy factor is 26.5. To calculate your RMD at age 73, you would divide $250,000 by 26.5 for a total payment of $9,434.

RMDs can be aggregated only among traditional IRAs owned by the same person, meaning you can total the annual RMDs from multiple IRAs and withdraw the combined amount from one or more of them. However, RMDs from 401(k)s, 403(b)s and other employer-sponsored plans must each be taken separately.

If you’re approaching retirement, the timing of your final working year can affect your RMD strategy. Retiring early in the year might give you more flexibility to plan distributions and manage taxes, while retiring late could mean your first RMD occurs in the same tax year, potentially pushing you into a higher bracket.

Also, keep in mind that RMDs are recalculated annually, so the amount will change from year to year.

If you need help calculating your RMDs or figuring out when they’re due, try SmartAsset’s RMD Calculator below.

Required Minimum Distribution (RMD) Calculator

Estimate your next RMD using your age, balance and expected returns.

Quickly estimate your RMDs and when to take them

RMD Amount for IRA(s)

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RMD Amount for 401(k) #1

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About This Calculator

This calculator estimates RMDs by dividing the user's prior year's Dec. 31 account balance by the IRS Distribution Period based on their age. Users can enter their birth year, prior-year balances and an expected annual return to estimate the timing and amount of future RMDs.

For IRAs (excluding Roth IRAs), users may combine balances and take the total RMD from one or more accounts. For 401(k)s and similar workplace plans*, RMDs must be calculated and taken separately from each account, so balances should be entered individually.

^*The IRS allows those with multiple 403(b) accounts to aggregate their balances and split their RMDs across these accounts.

Assumptions

This calculator assumes users have an RMD age of either 73 or 75. Users born between 1951 and 1959 are required to take their first RMD by April 1 of the year following their 73rd birthday. Users born in 1960 and later must take their first RMD by April 1 of the year following their 75th birthday.

This calculator uses the IRS Uniform Lifetime Table to estimate RMDs. This table generally applies to account owners age 73 or older whose spouse is either less than 10 years younger or not their sole primary beneficiary.

However, if a user's spouse is more than 10 years younger and is their sole primary beneficiary, the IRS Joint and Last Survivor Expectancy Table must be used instead. Likewise, if the user is the beneficiary of an inherited IRA or retirement account, RMDs must be calculated using the IRS Single Life Expectancy Table. In these cases, users will need to calculate their RMD manually or consult a finance professional.

For users already required to take an RMD for the current year, the calculator uses their account balance as of December 31 of the previous year to compute the RMD. For users who haven't yet reached RMD age, the calculator applies their expected annual rate of return to that same prior-year-end balance to project future balances, which are then used to estimate RMDs.

This RMD calculator uses the IRS Uniform Lifetime Table, but certain users may need to use a different IRS table depending on their beneficiary designation or marital status. It's the user's responsibility to confirm which table applies to their situation, and tables may be subject to change.

Actual results may vary based on individual circumstances, future account performance and changes in tax laws or IRS regulations. Estimates provided by this calculator do not guarantee future distribution amounts or account balances. Past performance is not indicative of future results.

SmartAsset.com does not provide legal, tax, accounting or financial advice (except for referring users to third-party advisers registered or chartered as fiduciaries ("Adviser(s)") with a regulatory body in the United States). Articles, opinions and tools are for general informational purposes only and are not intended to provide specific advice or recommendations for any individual. Users should consult their accountant, tax advisor or legal professional to address their particular situation.

Roth IRA Conversions

A Roth IRA conversion involves transferring funds from a traditional IRA to a Roth IRA so future withdrawals are tax-free.

The timing of your retirement within the year can affect your taxable income, which, in turn, impacts the tax liability of your conversion. Retiring early in the year when your income is lower creates an optimal window for a Roth IRA conversion because the lower taxable income could mean a lower tax bracket. This allows you to convert more assets with less tax burden.

Aligning Retirement With Personal and Financial Goals

Beyond financial and health considerations, your personal goals and lifestyle preferences could also influence the best time of year to retire.

Personal milestones: Significant personal milestones, such as paying off your mortgage, your children’s graduation or a spouse’s retirement, can provide a natural transition point.
Seasonal preferences: Your preferred lifestyle during retirement may also dictate the best time of year to retire. For example, if you enjoy traveling or weather-dependent hobbies, it may be better to retire in a season that aligns with those activities.
Emotional preparedness: Retirement is a major life transition, and emotional readiness is just as important as financial readiness. Some people find that a year-end retirement provides a greater sense of closure. Others may prefer to retire in the spring or summer when the weather is more conducive to outdoor activities and social gatherings.

Bottom Line

A couple reviewing their retirement plan.

Choosing the best time of year to retire depends on your financial security, healthcare coverage and personal fulfillment. When considering whether to retire at the beginning, middle or end of the year, it’s important to ensure that you align your retirement with your financial and personal objectives. This will help you transition more smoothly into this new chapter of your life.

Tips for Retirement Planning

A financial advisor can help you analyze investments and manage them for your retirement plan. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
If you’ve accumulated multiple retirement or investment accounts, consolidating them can make management easier. It can also help you better track your asset allocation, streamline RMDs and reduce administrative fees.